Surprise, surprise: 10,000 foreclosures daily in the U.S. This Reuters article says that:
More than 360,000 households with loans drew a foreclosure filing in July, a record dating back to January 2005, when RealtyTrac started tracking monthly activity.
As Columbia University sociologist Saskia Sassen notes in her eye-opening article on the future of finance capitalism,
An estimated 10-to-12 million households in the US will not be able to pay their mortgages over the next four years; under current conditions they would lose their home.
10-12 million homes is about 7.8% to 10% of the nation's entire housing stock of 128 million units, as of 2007.
Here's a roundup of recent interesting items. Readers, please ADD YOUR FAVORITE LINKS! And thanks in advance for your terrific comments.
No two ways about it. The situation is just plain depressing.
In "The Foreclosure Rescue Mirage" Andy Kroll writes in Mother Jones about "How the government’s flagship homeowner relief program hangs borrowers out to dry." Actually, his piece is pretty even-handed. He notes that
The Treasury [Department's} first [loan] servicer performance report, covering March to July 2009, found that servicers had offered modifications to just 15 percent of eligible delinquent homeowners, and initiated them for just 9 percent of that group. (And that total doesn't include homeowners who are less than 60 days delinquent or those with delinquency right around the corner, facing what's called "imminent default"—which means the percentage of HAMP modifications to date is surely even lower than 9 percent.)
And Kroll goes on to say that
Despite its flaws, HAMP is a good-faith effort by the government to address the foreclosure crisis, and there are signs of improvement. In June, HAMP officials began conducting much more rigorous reviews of servicers, and have started a "second look" program, in which servicers’ decisions to approve or deny HAMP modifications are scrutinized. Compliance officials are also analyzing samples of HAMP-modified loans to track error rates with servicers. And government officials have on several occasions tried to light a fire under HAMP servicers to speed up the modification process. On July 9, Treasury Secretary Tim Geithner and Department of Housing and Urban Development Secretary Shaun Donovan sent a letter to servicers exhorting them to move faster with modifications. Several weeks later, servicers’ representatives met with Obama administration officials in Washington to talk about boosting modifications.
The most encouraging - yet still discouraging - news I could find was this from the Christian Science Monitor:
More than 400,000 modifications have been extended and more than 230,000 trial modifications – efforts to see if the homeowner can actually afford to pay a lower monthly payment – have begun, the Making Home Affordable loan-modification program reported on Aug. 4. The Obama administration wants to double trial modifications by Nov. 1.
Writing in the Wall Street Journal, Economist Martin Feldstein proposes adjusting MFA to reduce foreclosures by locking homeowners into a reduced mortgage - a "cramdown" if I read him right.
With reasoning that will appeal to many loan servicers, Mark Calabria of the Cato Institute argues that even an MFA mortgage "cramdown" would be counter-productive in the first place:
The question then is, what exactly it is that homeowners with no equity are losing in the event of a foreclosure?
In addition to the Administration's efforts, several members of Congress are attempting to bring back the failed mortgage "cramdown" proposal of allowing bankruptcy judges to reduce the value of a mortgage to reflect the decline in the value of the home. Cramdown will do little for most delinquent borrowers. According to Freddie Mac, speculators make up about 40 percent of foreclosures. Another 50 percent are likely due to job loss, removing the income a borrower would need to put forth a repayment plan under Chapter 13 of the bankruptcy code. Combining speculators and the unemployed reveals that cramdown will do little to help at least 90 percent of borrowers currently in foreclosure.[italics mine]
Anybody having fun yet? (As we say around mile 20 of a 26 mile marathon.)
Finally, this story from today's New York Times, about "Judges’ Frustration Grows With Mortgage Servicers." Nothing momentous in this story except for the idea that the courts are showing signs of frustration with the poor service applicants for MHA are receiving from lenders (Wells Fargo in this case).
Closing thought: OK, let''s suppose with Calabria that 40% of all 10 million foreclosures over the next several are expendable speculators or second homers who can fend for themselves and don't need government support. That still leaves 50% foreclosures due to job loss plus 10% other situations: like retired seniors. Calabria contends (cold-bloodedly) that this 60% is losing nothing because these homeowners have no equity in their homes to start with. But it this simple? What's the impact be on the economy itself if 6 million homeowners families are forced to downsize their position in the economy over the next several years?
Told you the situation is depressing.